Euro zone minnow Greek Cyprus, with a GDP of just 17 billion euros, asked for aid in June to rescue its largest banks, heavily exposed to Greece debt.

World Bulletin / News Desk

IMF Managing Director Christine Lagarde met the leader of bailout candidate Greek Cyprus on Thursday, with both sides giving little away on the timing of financial aid to the island, battered by its exposure to Greece.

Euro zone minnow Greek Cyprus, with a GDP of just 17 billion euros, asked for aid in June to rescue its largest banks, heavily exposed to Greek debt. Talks with the European Commission, the IMF and the European Central Bank, known as the troika, have been inconclusive.

"We had a good and productive engagement about the ongoing discussions concerning Cyprus," Lagarde told reporters after meeting Greek Cyprus President Demetris Christofias, without elaborating. She was in Greek Cyprus to attend an informal gathering of European Union and euro zone finance ministers.

Greek Cyprus became the fifth euro zone nation to seek aid after its second largest bank failed to meet European regulatory capital requirements when it wrote down Greek sovereign debt holdings earlier this year. The island's largest bank has also sought state aid.

In addition to seeking aid from international lenders, the island has sought a 5 billion-euro bilateral loan from Russia, a close business and political ally.

Bailout estimates from the troika are still unclear, though some accounts put the figure at 10 billion euros.

In return, international lenders are demanding salary and pension cuts, pension reform and privatisations. Greek Cyprus's leftist government, which faces a general election in five months, has repeatedly said any measures should be balanced and not push the island deeper into recession.

Asked about the timing of any bailout deal, Christofias said: "When we are ready."

Greek Cyprus intends to counter the troika's proposals with proposals of its own, a government official said. Authorities plan to consult political parties and labour unions, a move the official said would give authorities a stronger hand in negotiations.

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